Hong Kong Clears Path for Crypto ETFs Amid Financial Innovation Drive
Hong Kong's financial regulator is paving the way for spot crypto ETFs, announcing its readiness to accept applications for these.
The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority jointly reviewed policies for entities dealing in virtual assets, signaling an openness to authorizing more funds with virtual asset exposure, notably virtual asset spot exchange-traded funds (VA spot ETFs).
The SFC outlined stringent criteria for funds directly investing in spot VA tokens accessible for public trading in Hong Kong via SFC-licensed virtual asset trading platforms (VATPs). Transactions involving crypto by these ETFs must occur solely through SFC-licensed platforms or authorized financial institutions, allowing both in-kind and in-cash subscription and redemption for SFC-authorized spot VA ETFs.
Regarding custody, the SFC mandates that custodians delegate crypto custody only to SFC-licensed VATPs or entities meeting HKMA’s crypto custody standards. Valuation of spot virtual assets will rely on an indexing approach based on VA trade volume across major trading platforms.
This move by Hong Kong contrasts with China’s stricter stance on cryptocurrencies, demonstrating Hong Kong’s open approach to crypto firms, even encouraging collaborations with banks. Experts view this as a potential breakthrough within developed financial markets, showcasing Hong Kong’s willingness to embrace innovative financial instruments like a crypto spot ETF.
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Hong Kong has been actively fortifying its position as a global financial hub, evident in policy statements released in October 2022. It introduced its crypto licensing regime in June, allowing licensed exchanges to offer retail trading services.
Julia Leung, CEO of Hong Kong’s SFC, emphasized the regulator’s interest in evaluating spot crypto ETFs, emphasizing technology’s role in enhancing efficiency. Presently, Hong Kong has listed futures-based crypto ETFs such as Samsung Bitcoin Futures Active ETF, CSOP Bitcoin Futures ETF, and CSOP Ether Futures ETF.
Alexander Stefanov
Reporter at CoinsPress
Alex is an experienced finance journalist and a cryptocurrency and blockchain enthusiast. With over five years of experience covering the industry, he deeply understands the complex and constantly evolving world of digital assets. His insightful and thought-provoking articles provide readers with a clear picture of the latest developments and trends in the market. His passionate approach allows him to break down complex ideas into accessible and insightful content. Follow up on his content to be up to date with the most important trends and topics - stay ahead of the curve with CoinsPress.
